[Civitas Resources Second Quarter 2025 Financial Results](index=1&type=section&id=Civitas%20Resources%20Second%20Quarter%202025%20Financial%20Results) [Performance and Strategic Highlights](index=1&type=section&id=Performance%20and%20Strategic%20Highlights) The company reported strong Q2 2025 results, announced asset divestitures, and reinstated its capital return program - Second quarter 2025 results surpassed expectations with strong oil production and reduced capital and operating costs[4](index=4&type=chunk) - The company is on track with its cost optimization efforts, aiming for **$40 million in savings in 2025** and **$100 million in 2026**[4](index=4&type=chunk) - Agreements were signed to divest non-core DJ Basin assets for **$435 million**, with proceeds designated for debt reduction[4](index=4&type=chunk)[10](index=10&type=chunk) - A capital return program has been reinstated, allocating **50% of free cash flow** (post-dividend) to share buybacks and **50% to debt reduction**[1](index=1&type=chunk)[4](index=4&type=chunk) - Management emphasized that decisive steps in operations, cost savings, hedging, and divestments have resulted in a stronger company[3](index=3&type=chunk) [Second Quarter 2025 Financial & Operational Results](index=2&type=section&id=Second%20Quarter%202025%20Financial%20%26%20Operational%20Results) The company generated nearly $1.1 billion in revenue and achieved a 6% sequential increase in oil production Key Second Quarter 2025 Financial Results | | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :--- | :--- | :--- | | **Net Income ($MM)** | $124 | $310 | | **Adjusted Net Income ($MM)** | $92 | $258 | | **Operating Cash Flow ($MM)** | $298 | $1,017 | | **Adjusted EBITDAX ($MM)** | $749 | $1,535 | | **Sales Volumes (MBoe/d)** | 317 | 314 | | **Oil Volumes (MBbl/d)** | 149 | 145 | | **Capital Expenditures ($MM)** | $506 | $1,001 | | **Adjusted Free Cash Flow ($MM)** | $123 | $294 | [Financial Results](index=2&type=section&id=Financial%20Results) Q2 2025 revenue reached nearly $1.1 billion, supported by hedging gains and a 10% reduction in cash operating expenses - Crude oil, natural gas, and NGL revenues totaled nearly **$1.1 billion**, supported by strong crude oil volumes[8](index=8&type=chunk) - Realized hedging gains for the quarter amounted to **$69 million**, primarily from crude oil and natural gas swaps[8](index=8&type=chunk) - Cash operating expenses decreased by more than **10%** from Q1 to **$10.19 per BOE**, with Permian Basin LOE per BOE falling by over 15%[15](index=15&type=chunk) - Financial liquidity at quarter-end was **$2 billion**, consisting of cash on hand and available borrowings under the revolving credit facility[15](index=15&type=chunk) [Operational Performance](index=2&type=section&id=Operational%20Performance) Average daily oil volumes grew 6% sequentially, driven by new Permian wells and optimized capital expenditures - Average daily oil volumes increased by **6%** from Q1, driven almost entirely by new wells commencing production in the Permian Basin[8](index=8&type=chunk) - Capital expenditures were at the low end of expectations, benefiting from well cost optimization and efficiency gains[8](index=8&type=chunk) Drilling & Completion Cost Reductions (Year-to-Date) | Basin | Cost per Lateral Foot | % Reduction | | :--- | :--- | :--- | | **Delaware** | $880 | 7% | | **Midland** | $685 | 5% | | **DJ** | $650 | 3% | - In the DJ Basin, the company turned **46 net operated wells** to sales and drilled a multi-well pad of four-mile wells, demonstrating expertise in long-reach laterals[8](index=8&type=chunk) [Capital Allocation and Strategic Updates](index=1&type=section&id=Capital%20Allocation%20and%20Strategic%20Updates) The company reinstated its capital return program and announced significant non-core asset sales to accelerate debt reduction [Capital Return Program](index=1&type=section&id=Capital%20Return%20Program) The reinstated program allocates 50% of post-dividend free cash flow to buybacks and 50% to debt reduction - The reinstated capital return strategy allocates **50% of free cash flow** (after base dividend) to share buybacks and **50% to debt reduction**[4](index=4&type=chunk) - The Board increased the share repurchase authorization to **$750 million**, and Civitas plans a **$250 million** accelerated share repurchase program[1](index=1&type=chunk)[4](index=4&type=chunk) - A quarterly dividend of **$0.50 per share** was approved, payable on September 25, 2025, to shareholders of record as of September 11, 2025[9](index=9&type=chunk) [Non-Core Asset Divestments](index=3&type=section&id=Non-Core%20Asset%20Divestments) Civitas agreed to sell non-core DJ Basin assets for $435 million, with all proceeds dedicated to debt reduction - Executed two agreements to divest non-core DJ Basin assets for a total of **$435 million**[10](index=10&type=chunk) - The divested assets are estimated to produce approximately **10 MBoe/d** (about 50% oil) in 2026[10](index=10&type=chunk) - All proceeds from the transactions, expected to close around the end of Q3 2025, will be used for debt reduction[11](index=11&type=chunk) - The divestments are expected to reduce production by **2 MBoe/d in Q3 2025** and **12 MBoe/d in Q4 2025**[11](index=11&type=chunk) [Updated 2025 Outlook](index=3&type=section&id=Updated%202025%20Outlook) The company is on track for its 2025 cost savings target and anticipates over 5% oil volume growth in Q3 - The company is on track with its cost optimization initiative to deliver **$40 million in savings in 2025**[12](index=12&type=chunk) - For Q3, Civitas anticipates more than **5% oil volume growth**, with capital expenditures expected to be lower than Q2[13](index=13&type=chunk) Third Quarter 2025 Guidance | | 3Q25 Guidance | | :--- | :--- | | **Sales Volumes (MBoe/d)** | 327 - 338 | | **Oil Volumes (MBbl/d)** | 154 - 160 | | **Capital Expenditures ($MM)** | $460 - $500 | | **Cash Operating Expenses ($ per BOE)** | $9.80 - $10.30 | [Financial Statements and Schedules](index=6&type=section&id=Financial%20Statements%20and%20Schedules) This section presents unaudited consolidated financial statements and reconciliations of non-GAAP financial measures [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company reported Q2 2025 net income of $124 million on total operating net revenues of $1.057 billion Q2 2025 Statement of Operations Highlights (in millions) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **Total operating net revenues** | $1,057 | $1,313 | | **Total operating expenses** | $887 | $926 | | **Income from operations before income taxes** | $162 | $283 | | **Net income** | $124 | $216 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities was $298 million, while investing activities used $489 million in Q2 2025 Q2 2025 Statement of Cash Flows Highlights (in millions) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $298 | $359 | | **Net cash used in investing activities** | $(489) | $(490) | | **Net cash provided by financing activities** | $240 | $171 | | **Net change in cash** | $49 | $40 | [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets were $15.403 billion, with total stockholders' equity at $6.794 billion Balance Sheet Highlights (in millions) | Metric | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | **Total current assets** | $1,050 | $988 | | **Total assets** | $15,403 | $14,944 | | **Total current liabilities** | $1,683 | $2,205 | | **Debt, net** | $5,388 | $4,494 | | **Total liabilities** | $8,609 | $8,315 | | **Total stockholders' equity** | $6,794 | $6,629 | [Sales Volumes and Prices](index=9&type=section&id=Sales%20Volumes%20and%20Prices) Total average daily sales volumes were 317 MBoe/d, with an average realized crude oil price of $66.55 per barrel Q2 2025 Average Daily Sales Volumes | Commodity | Permian Basin | DJ Basin | Total | | :--- | :--- | :--- | :--- | | **Crude oil (MBbl/d)** | 83 | 66 | 149 | | **Natural gas (MMcf/d)** | 255 | 269 | 524 | | **NGLs (MBbl/d)** | 45 | 35 | 80 | | **Total (MBoe/d)** | 171 | 146 | 317 | [Non-GAAP Reconciliations](index=10&type=section&id=Non-GAAP%20Reconciliations) This section reconciles key non-GAAP metrics, including Adjusted EBITDAX of $749 million for Q2 2025 Key Non-GAAP Metrics (Q2 2025, in millions) | Metric | Value | | :--- | :--- | | **Adjusted Net Income** | $92 | | **Adjusted EBITDAX** | $749 | | **Adjusted Free Cash Flow** | $123 | | **Cash General and Administrative** | $40 |

Group 1 - Civitas Resources is identified as a profitable and capital-disciplined oil producer with high-quality acreage in the Lower 48 states [1] - The company has a strong hedge book, which provides financial stability and risk management [1] - There is clear visibility into production growth, indicating a positive outlook for future performance [1]

Wall Street expects a year-over-year decline in earnings on lower revenues when Civitas Resources (CIVI) reports results for the quarter ended June 2025. While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates. The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on August 6. ...

Industry Overview - The Zacks Oil and Gas - Exploration and Production - United States industry is facing challenges due to lower crude prices influenced by geopolitical factors and an oversupply of natural gas [1][3][5] - The industry is currently ranked 186 out of 245 Zacks industries, placing it in the bottom 24% [8][10] - The industry's earnings estimates for 2025 have decreased by 41.6% over the past year, indicating a negative outlook [10] Key Trends - Easing geopolitical tensions have led to a reduction in oil prices, with WTI crude trading around $65, impacting companies reliant on higher prices for new investments [3][4] - OPEC forecasts a significant increase in global oil demand to 123 million barrels per day by 2050, necessitating an investment of $18.2 trillion in the oil and gas sector [4] - Natural gas production in the U.S. has reached record levels, with storage exceeding seasonal norms by 6%, which may limit price increases [5] - The International Energy Agency (IEA) predicts a slowdown in global oil demand growth post-2026 due to the rise of electric vehicles and cleaner energy policies [6][7] Company Highlights - **W&T Offshore (WTI)**: A leading oil and natural gas explorer with a market capitalization of nearly $270 million, known for its disciplined operations and positive cash flow for 28 consecutive quarters [18][19] - **EQT Corporation (EQT)**: The largest natural gas producer in the U.S. with a market cap of approximately $35 billion, expected EPS growth rate of 46.3% over the next three to five years [21][22] - **APA Corporation (APA)**: Engaged in exploration and production with a market cap of around $7 billion, known for its successful drilling in Suriname and the Permian Basin [23][24] - **Civitas Resources (CIVI)**: Focused on the DJ Basin and Permian Basin, with a market cap of about $2.8 billion, recognized for strong well returns and shareholder returns [26][27] Valuation Metrics - The industry is currently trading at an EV/EBITDA ratio of 11.28X, significantly lower than the S&P 500's 17.71X, but above the sector's 4.86X [15]

Group 1 - The energy sector is currently the worst performer in the S&P 500, with Civitas Resources Inc. (NYSE: CIVI) down by 33% year-to-date [1] - Despite the poor performance, there is a belief that Civitas Resources Inc. can end the year in positive territory [1] - The focus is on identifying strongly undervalued stocks within various sectors and geographies [1] Group 2 - The author has a background in business studies from France, the U.S., and Russia, and is a professional portfolio manager based in Luxembourg [1] - The author operates as a Popular Investor on the eToro platform, where investment opinions and decisions are publicly displayed [1]

Core Viewpoint - Civitas Resources, Inc. is under investigation for potential breaches of fiduciary duties by its officers and directors, linked to allegations of misrepresentation regarding the company's oil production and financial condition [1][2]. Group 1: Allegations of Misrepresentation - Insiders at Civitas Resources allegedly caused the company to misrepresent its likelihood of significantly reducing oil production in 2025 due to declines following a production peak in Q4 2024 and a low TIL count at the end of 2024 [2]. - The company may need to acquire additional acreage and development locations to increase oil production, which could lead to significant debt and necessitate the sale of corporate assets to offset acquisition costs [2]. - Civitas's financial condition may require disruptive cost-reduction measures, including a significant workforce reduction, indicating that the company's business and financial prospects were overstated [2]. - The public statements made by Civitas were reportedly materially false and misleading at all relevant times [2].

Group 1 - The Daily Drilling Report is an investment group focused on providing analysis for the oil and gas industry, featuring a model portfolio that encompasses all segments of upstream oilfield activity with weekly updates [1] - The group offers investment ideas for both U.S. and international energy companies, covering a range from shale to deepwater drillers [1] - Technical analysis is utilized to identify catalysts within the oil and gas sector [1] Group 2 - Fluidsdoc is an international oil industry veteran with 40 years of experience, specializing in the upstream oilpatch and having worked in over twenty countries [2]

Core Insights - Class actions have been initiated for stockholders of Open Lending Corporation and Civitas Resources, with deadlines for lead plaintiff petitions approaching [1] Open Lending Corporation (NASDAQ:LPRO) - The class period for Open Lending is from February 24, 2022, to March 31, 2025, with a lead plaintiff deadline of June 30, 2025 [2] - Allegations include materially false and misleading statements regarding the company's risk-based pricing models, profit share revenue, and the value of vintage loans from 2021 and 2022 [2] - The complaint asserts that the company's positive statements about its business and prospects were misleading and lacked a reasonable basis [2] Civitas Resources, Inc. (NYSE:CIVI) - The class period for Civitas Resources is from February 27, 2024, to February 24, 2025, with a lead plaintiff deadline of July 1, 2025 [3] - Allegations include misleading statements about the likelihood of significant oil production reductions in 2025 and the need for additional acreage and development locations, which could incur significant debt [3] - The lawsuit claims that Civitas Resources' financial condition would necessitate disruptive cost reduction measures, including workforce reductions, and that its business and financial prospects were overstated [3] - On February 24, 2025, Civitas reported Q4 2024 revenue of $1.29 billion, missing estimates by $3.44 million, and non-GAAP EPS of $1.78, missing by $0.21 [4] - The company projected a year-over-year decline in oil production of approximately 4%, alongside a $300 million transaction to expand its Permian Basin position and a $300 million divestment target [4] - Following the announcement, Civitas Resources' stock price fell by more than 18% [4]

Core Viewpoint - Civitas Resources, Inc. is facing a class action securities lawsuit due to alleged securities fraud that affected investors between February 27, 2024, and February 24, 2025 [1] Group 1: Lawsuit Details - The lawsuit claims that Civitas was likely to significantly reduce its oil production in 2025 due to declines following a production peak at the DJ Basin in Q4 2024 and a low TIL count at the end of 2024 [2] - Increasing oil production would necessitate acquiring additional acreage and development locations, leading to significant debt and potential asset sales to cover acquisition costs [2] - The financial condition of Civitas would require disruptive cost reduction measures, including a significant workforce reduction [2] - Consequently, the business and financial prospects, as well as operational capabilities of Civitas, were overstated, making public statements materially false and misleading [2] Group 2: Next Steps for Investors - Investors who suffered losses in Civitas Resources during the relevant timeframe have until July 1, 2025, to request the Court to appoint them as lead plaintiff [3] - Class members may be entitled to compensation without any out-of-pocket costs or fees, and participation does not require serving as a lead plaintiff [3] Group 3: Firm Background - Levi & Korsinsky has a history of securing hundreds of millions of dollars for shareholders and has a strong track record in high-stakes cases [4] - The firm specializes in complex securities litigation and has a team of over 70 employees dedicated to serving clients [4] - For seven consecutive years, Levi & Korsinsky has been ranked in the Top 50 Report by ISS Securities Class Action Services as one of the leading securities litigation firms in the U.S. [4]

Core Viewpoint - A securities class action lawsuit has been filed against Civitas Resources, Inc. for failing to disclose significant production reductions and operational challenges during the Class Period from February 27, 2024, to February 24, 2025 [1][3]. Company Overview - Civitas Resources, Inc. is a crude oil and natural gas company headquartered in Denver [2]. Financial Performance - For Q4 and full-year 2024, Civitas reported revenue of $1.29 billion, missing consensus estimates by $3.44 million, and non-GAAP earnings per share of $1.78, which was $0.21 below expectations [4]. - The net income for the quarter was $151.1 million, or $1.57 per share, a decline from $302.9 million, or $3.23 per share, in the same quarter the previous year [4]. Operational Challenges - Civitas indicated that it is likely to significantly reduce oil production in 2025 due to natural declines after peak production in the DJ Basin in Q4 2024 [3]. - The company announced a 10% workforce reduction and the termination of its Chief Operating Officer and Chief Transformation Officer [5]. Market Reaction - Following the announcement of its financial results and operational outlook, Civitas's stock price fell by $8.95 per share, or 18%, closing at $40.35 per share on February 25, 2025 [6].